Arizona's Minimum Wage Increase to Boost Local Economy

As the new year starts, Arizona's lowest-paid workers will see a gift—the state's minimum wage will go up 15 cents, to a new total of $7.80 an hour. More than 72,000 workers will get a boost in their pay equaling an average of $320 annually. According to the Economic Policy Institute, the increased consumer spending generated by the increase will add $13 million to the local gross domestic product (GDP). Nine other states also will be raising their wages on Jan. 1, 2013, helping nearly 1 million workers across the nation.

A large body of research shows that raising the minimum wage is an effective way to boost the incomes of low-paid workers without reducing employment. A groundbreaking 1994 study by David Card and Alan Krueger, current chair of the White House Council of Economic Advisers, found that an increase in New Jersey’s minimum wage did not reduce employment among fast-food restaurants. These findings have been confirmed by 15 years of economic research, including a 2010 study published in the Review of Economics and Statistics that analyzed data from more than 500 counties and found that minimum wage increases did not cost jobs. Another recent study published in April 2011 in the journal Industrial Relations found that even during times of high unemployment, minimum wage increases did not lead to job loss.

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